ARTICLES ABOUT LOW COST CARRIERS BY DATE - PAGE 3

NEW DELHI: Kingfisher Airlines today justified its plans to close down its low-cost carrier in four months saying the operating costs involved were the same as in a full-service carrier and the revenues lesser. Maintaining that there was more competition in the no- frill segment than the full-service segment in India, Kingfisher CEO Sanjay Aggarwal said the decision would help the airline company generate additional revenue after its exit from the low-cost service, where competition was more intense and a price war could hit the margins.

NEW DELHI: With domestic passenger traffic in the low-fare segment growing at a high pace, Kingfisher's decision to close down its low-cost arm would give additional space to the major no-frill carriers to expand their operations, industry sources said on Thursday. The decision to close down Kingfisher Red was announced by airline group chief Vijay Mallya yesterday who said this was being done "because we don't intend to compete in the low-cost segment". SpiceJet , GoAir and IndiGo, along with the low-cost arms of Air India and Jet Airways , have already established themselves well in the domestic and, in the recent past, in the international markets.

Kingfisher Airlines' decision to terminate its low-cost carrier operations is aimed at increasing its attention on the full-services model, which has relatively lesser competition. However, the move seems unviable since it will not only impact Kingfisher's market share and financial performance in the coming quarters but also increase prominence of low-cost rivals including Spice-Jet and Indigo in the domestic aviation industry. After taking over Deccan Air's low cost-carrier operations in late 2007, Kingfisher has struggled hard to keep pace with other low-cost operators.

NEW DELHI: With domestic passenger traffic in the low-fare segment growing at a high pace, Kingfisher's decision to close down its low-cost arm would give additional space to the major no-frill carriers to expand their operations, industry sources said today. The decision to close down Kingfisher Red was announced by airline group chief Vijay Mallya yesterday who said this was being done "because we don't intend to compete in the low-cost segment". SpiceJet , GoAir and IndiGo, along with the low-cost arms of Air India and Jet Airways , have already established themselves well in the domestic and, in the recent past, in the international markets.

HYDERABAD: Irrational pricing of fares and excessive competition adopted by the airline industry could crimp profit margins of low-cost carrier SpiceJet for the second consecutive quarter, a senior official told ET on conditions of anonymity. Despite an impressive 35% growth in its revenues in the first quarter this financial year, SpiceJet made losses amounting to 79 crore as competition from full-cost carriers stopped the company from raising ticket prices. Even higher fuel cost restrained the airline from charging the passengers an increased fare because the full-fledged carriers reduced prices to increase load factors and gain market share.

CHENNAI: Facing stiff competition from low fare air-carriers, Singapore Airlines is all set to introduce a low cost carrier soon, a top official said here on Tueday. "We are looking for a low cost carrier. It will be used in the short, medium and long haul routes", Singapore Airlines Southern India Manager Richard Tan told reporters. He said the launch of carrier would add to the existing operations of Tiger, Silk Air and Singapore Airlines cargo. Declining to give further details on the carrier,he said the company recently appointed a CEO to head the LCC vertical.

A shift in traveller preference towards low-fare carriers will play a crucial role in defining the focus of Indian airlines in the months ahead, said analysts. Even full-service private carriers such as Kingfisher Airlines , reeling under high fuel costs and mounting losses, may rely on its low-cost operations to tide over the challenging cost environment. The Vijay Mallya-promoted carrier is reportedly planning to hive off its low-cost service Kingfisher Red into a separate entity.

The sorry plight of state-owned carrier Air India is a telling commentary on how a combination of political interference and mismanagement can run the best of public sector companies to seed. To be sure, it been a while since anyone perceived AI as anywhere near the best of state-owned companies. But that is only because a succession of ministers and chairmen tried to run it as a departmental undertaking instead of allowing it to be run professionally at arm's length distance from its parent ministry.

India's biggest private airline Jet Airways reported a robust increase in yield and lowered its interest burden in the quarter ended June, an indication of its improving business performance. However, intense competition from low-cost carriers, seasonality of business and rising fuel cost continue to be major challenges for the airline in the upcoming quarters. In April-June, Jet Airways reported a net loss of 123 crore compared with a net profit of 3.52 crore a year earlier.

With the 'other' India that does not live in the metros and big cities reaching for the sky, low-cost carriers may soon rule the skies. From being fringe players, the LCCs are now big enough to give their bigger rivals a run for their seats. SpiceJet overtook Air India in terms of market share for May this year. Air India's market share for the month slipped to 13% while SpiceJet recorded a market share of 14.2%. Not surprisingly, the LCCs are expected to do better business than their full-service counterparts this fiscal.